U.S. consumer prices went up as predicted in July. This increase may console officials of the Federal Reserve program who have been worried about low inflation while they evaluate process on cutting down massive bond buying schemes.
As the U.S. central bank announced plans to begin cutting down its USD85 billion monthly bond purchases to keep borrowing cost low for the later part of the current year, it is likely the Fed will make a decision in September on the future of the bond purchasing program as most economists had anticipated the CPI increase.
Consumer Price Index rose by 0.2% as cost of goods and services covering food, clothing and tobacco increased based on information released by the Labor Department last Thursday.
Last June, CPI increased by 0.5%. July's consumer inflation increase was not much of a surprise as economists had already expected this. For the 12-month period through July this year, index rose to 2%. This was the largest increase since February after a registered 1.8% in June.
Some officials of the central bank may feel a little comforted with the rise in inflation towards the Fed's 2% mark. This is mainly due to their concern of the effects and potential dangers of low inflation.
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